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Hi, I’m a Tablet. I’ll Be Your Waiter Tonight.; Chains Like Panera Bread and Chili’s are using apps and tablets to improve food preparation, ordering and payment, and to entertain customers

Hi, Im a Tablet. Ill Be Your Waiter Tonight.

Panera and Chilis Turn to Tablets to Streamline Service

By STEPHANIE STROMJUNE 20, 2014

BRAINTREE, Mass.  An idea came to Ronald M. Shaich, the chief executive of Panera Bread, as he was driving his children to school about four years ago: What if everyone could order lunch the way he did?

The Shaich households morning routine included a call to the manager of the nearest Panera location to order lunch for Mr. Shaichs son (Asian sesame chicken salad with half the normal amount of chicken and twice the won ton strips) and daughter (various salads but with dressing on the side).

The family then hopped in the car, stopping on the way to school to pick up the lunches. “It suddenly occurred to me that this was a wonderful system for the C.E.O., but what about the other eight million people who order from Panera?” Mr. Shaich said.

“Everyone else got in line to get to the register, then got in another line where they had to play a game called Go Find Your Food,” he said. “For drinks, they had to go to another line, and if they wanted any kind of espresso drink, we sent them to a fourth line.”

So, the corporate chieftain who once declared that “the food business is not a technology business” has spent $42 million to update Panera. “The goal is to eliminate friction points so that customers have a better experience,” Mr. Shaich said, “because if they have a better experience, it will help our business.”

Restaurants have been late to the tech party, and many are now scrambling to incorporate tablets, apps, computerized kitchen equipment and data analysis capabilities. Applebees is trying out online ordering and tablet payment systems, and in Asia, McDonalds has been testing what it calls the Happy Table, an interactive table that “plays” with children using mobile devices.

Chilis Grill & Bar has added computerized ovens that use conveyor belts, infrared technology and hot air to prepare food  at a cost of $100,000 per oven  in each of its 1,200 restaurants. Together with tableside tablets that allow customers to order desserts and alcoholic drinks as well as pay their bills and play games without the help of a waiter, new technology has helped Chilis address one of its customers biggest complaints slow service  and add higher-margin items to its menu.

“These things have helped our customers expedite and control their experience more, which in turn is good for our business,” said Wyman Roberts, chief executive of Brinker International, which operates Chilis and Maggianos Little Italy.

But Mr. Roberts also noted that incorporating technology carried risks. Even in a world increasingly run off iPad-like devices using apps like Uber that increase customization, consumers can still be put off by technology they perceive as annoying or unable to deliver on what it promises.

“If I get a promotion for a new appetizer or a coupon over my app, the restaurant that offered it better have the supplies in inventory and a kitchen system that can produce it when I want it,” said Scott A. Rosenberger, leader of Deloitte Consultings travel, hospitality and leisure practice. “The reality of it is that there is tremendous potential upside, but execution is a challenge.”

 “While the growth of couponing and online check-in and ordering is expanding rapidly, we dont think thats really where the future lies,” Mr. Rosenberger said. “The research says overwhelmingly that the future lies in offering games, awards, entertainment and other ways of keeping me engaged without being creepy and digging too far into my privacy.”

Chilis has teamed up with Ziosk, a company that offers a tabletop small tablet with a menu, ordering options, games and a payment system. Austen Mulinder, chief executive at Ziosk, says roughly 20 million transactions a month take place over the companys system.

Mr. Roberts of Chilis said about a fourth of the customers answered a survey about their experience, providing feedback. The system is so sophisticated that it can ask different questions to customers based on their orders, soliciting opinions on a new special or dessert item. A customer who has a coupon can opt to switch on a camera that will read it, or use the camera to upload a photo to Facebook or Pinterest.

Chilis pays Ziosk a monthly service fee, but if enough customers opt to pay to play games on the system  trivia is the most popular game at Chilis  it can make that money back under a revenue-sharing agreement.

Similarly, Panera has found its investment in kitchen technology as beneficial as the tablets and apps it offers consumers. Color-coded screens deliver orders to the kitchen staff: A red stripe over an ingredient means leave it off, a green stripe indicates an addition. Other colors signify takeout.

The orders roll in from kiosks in the front of the store where customers peruse a broader menu than can be displayed on boards above cash registers.

Customers can add or subtract ingredients, save their preferences for the next visit, swipe credit cards and move on to pick up their meals. “Most of us are creatures of habit; we order the same thing,” said Hope Neiman, chief marketing officer at Tillster, which has built technology programs for Chilis, Taco Bell and Subway. “Remembering how a customer likes his favorite meal helps create stickiness among guests  and thats what this is all about, increasing retention, frequency and average check size.”

Paneras customers also can order directly from their tables, using their mobile phones. Those meals can be delivered to the table, eliminating the lines that concerned Mr. Shaich.

The new system has helped the Braintree location reduce errors in orders, which could run as high as six out of every 10, in that way increasing profitability, said Chris Hogan, its manager. It has allowed Mr. Hogan to put fewer workers at the cash register and more in the kitchen.

Panera has installed the new technology in about 20 company-owned restaurants around Boston and Charlotte, N.C., at a cost of about $125,000 each, the company said. “Profits are up in all of them, and orders have increased,” Mr. Shaich said.

Ed Doherty, owner of Doherty Enterprises, which has 35 Panera restaurants in Brooklyn, Queens and Staten Island, was initially skeptical of Paneras shift and its plans for table service in particular. “I have some very high-volume cafes with limited seating, so I like it when people stand on line because it gives the people sitting down a chance to eat their meal,” Mr. Doherty said.

On a trip to Charlotte, N.C., he visited a Panera with the technology-driven system, experimenting with the options for ordering. “I looked at it, observed it, played with it, and I walked out of there saying, Ron has really gotten it  this works, ” Mr. Doherty said.

Doherty Enterprises also owns some Applebees restaurants, and Mr. Doherty said that orders placed using the chains new online systems were $5 higher than regular orders.

He said he preferred investing in technology to forced remodeling, which several restaurant chains have imposed on their franchisees in the last few years. “For the most part, a remodel maintains your business; theres no way to see a real return on the investment,” he said. “I think this investment, though, will increase our guest counts and sales.”

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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